Update to Announcement 2012-25 —
Extension of Time for Businesses to Comply with Rev. Rul. 2012-18
Regarding the Proper Treatment of Service Charges

This announcement extends the time for businesses to comply
with the rules regarding proper treatment of service charges specified
in Q&A 1 of Rev. Rul. 2012-18, 2012-26 I.R.B. 1032. This extension
is provided in order to allow businesses not currently in compliance
additional time to modify their business practices and make needed
system changes.

In a previously issued interim guidance memorandum (IGM), included
as an attachment to Announcement 2012-25, 2012-26 I.R.B. 1054, the
Internal Revenue Service (Service) provides administrative guidelines
to examiners concerning Rev. Rul. 2012-18. Specifically, the IGM
instructs examiners to apply Q&A 1 of Rev. Rul. 2012-18, in limited
circumstances, prospectively to amounts paid on or after January 1,
2013. In Announcement 2012-25, the Service sought public comments
regarding whether additional time was needed to ensure that systems
are compliant. Based on the comments received, the Service has determined
that an extension to January 1, 2014, is appropriate. An updated
IGM will be issued to examiners informing them of the extension of
time to January 1, 2014, with the extension to apply in the limited
circumstances set forth in the IGM.

EFFECT ON OTHER DOCUMENTS

Announcement 2012-25 is amplified.

DRAFTING INFORMATION

The principal author of this announcement is Linda L. Conway-Hataloski
of the Office of Division Counsel/Associate Chief Counsel (Tax Exempt
& Government Entities). For questions regarding this announcement,
contact Linda L. Conway-Hataloski at 202-622-0047 (not a toll-free
call).